Oil is a leading cause of war. According to a recent study, between one-quarter and one-half of interstate wars since 1973 have been linked to oil. The latest headlines do not contradict these findings.

This week, intensifying violence in the Middle East has put energy markets into the spotlight. Let’s step back and examine the unfolding dynamics of the oil, gas, and renewable energy industries and where investors can place profitable bets.

The oil market in the second half of 2024 is marked by significant volatility and uncertainty, driven by geopolitical tensions, supply chain disruptions, and shifting demand patterns. Despite the global push towards renewable energy, oil remains a critical component of the energy mix.

Military strife, particularly in the Middle East and Eastern Europe, continues to impact oil supply and prices. Conflicts and political instability in major oil-producing regions have led to supply disruptions, causing price fluctuations.

These geopolitical developments present both risks and opportunities. Supply disruptions can lead to short-term price spikes, offering opportunities for traders to capitalize on price movements.

Crude oil prices spiked Wednesday after Israel assassinated Hamas’s political leader on Iranian soil, prompting threats of retaliation from Tehran. The event followed Israel’s killing of a Hezbollah leader on Tuesday. World leaders are expressing the fear that the region stands on the cusp of all-out war.

The worsening conflict in the Middle East, combined with record U.S. oil demand due to the resilient economy, has generated bullish tailwinds for oil prices (see chart).

Advancements in extraction technologies, such as hydraulic fracturing and horizontal drilling, have increased oil production the United States. The proliferation of shale oil has contributed to a more diversified global supply, reducing reliance on traditional oil-producing countries.

Investors can benefit from these advancements by investing in companies that are leaders in shale oil production or those that provide innovative technologies and services to the oil industry.

The demand for oil is undergoing a transformation, as economies recover from the COVID-19 pandemic amid a growing emphasis on reducing carbon emissions. While the transportation sector remains a major consumer of oil, the rise of electric vehicles (EVs) is gradually reducing oil demand.

However, sectors such as aviation and shipping, where alternatives are not yet widely available, continue to rely heavily on oil. Investors should consider diversifying their portfolios to include companies involved in the EV supply chain and those innovating in sustainable aviation fuels and shipping technologies.

Natural gas is often seen as a bridge fuel in the transition to a low-carbon future. It emits less CO2 compared to coal and oil when burned and is abundant in many parts of the world. The natural gas market in the latter half of 2024 presents opportunities and challenges for investors.

Liquefied natural gas (LNG) is becoming an increasingly important component of the global energy market. The ability to transport natural gas across oceans in liquid form has opened new markets and increased global trade.

Major LNG exporters, including the U.S., Qatar, and Australia are expanding their infrastructure to meet growing demand in Asia and Europe. Investors should look to invest in companies involved in the LNG value chain, from production to transportation and regasification.

The transition to natural gas requires significant investments in infrastructure, including pipelines, storage facilities, and distribution networks.

Governments and private companies are investing heavily in these projects to ensure a reliable supply of natural gas. Investors can take advantage of these developments by investing in infrastructure-focused funds or companies specializing in energy infrastructure.

While natural gas is cleaner than coal and oil, it is not without environmental concerns. Methane leaks during extraction and transportation can offset its lower CO2 emissions.

Companies that develop technologies to reduce methane emissions or capture and utilize carbon emissions present attractive investment opportunities. The growing trend of blending hydrogen with natural gas to reduce emissions also opens new avenues for investment.

The shift towards renewable energy sources is accelerating, driven by falling costs, technological advancements, and supportive policies. Renewable energy investments are increasingly seen as not only environmentally responsible but also financially lucrative.

Solar and wind power are the frontrunners in the renewable energy sector, experiencing significant growth in recent years. The cost of solar panels and wind turbines has decreased dramatically, making these technologies competitive with traditional fossil fuels.

In 2024, the expansion of solar and wind farms has continued at a rapid pace, supported by government incentives and corporate commitments to sustainability. Investors can benefit from this trend by investing in renewable energy companies, green energy exchange-traded funds (ETFs), and projects focused on solar and wind power generation.

One of the biggest challenges with renewable energy is its intermittency. Energy storage technologies, such as batteries and pumped hydro storage, are crucial for ensuring a stable and reliable supply of renewable energy.

The development of advanced battery technologies, driven by the rise of electric vehicles, also is benefiting the renewable energy sector. Companies involved in energy storage solutions and battery manufacturing present significant investment opportunities.

Green hydrogen, produced using renewable energy, is gaining traction as a versatile and clean energy carrier. It has the potential to decarbonize industries that are difficult to electrify, such as heavy industry and long-haul transportation.

Investments in green hydrogen production, distribution, and utilization technologies are expected to grow, offering new opportunities for investors looking to capitalize on the hydrogen economy.

Government policies and regulations play a crucial role in the growth of renewable energy. Many countries have set ambitious targets for reducing greenhouse gas emissions and increasing the share of renewables in their energy mix.

Supportive policies, such as tax credits, subsidies, and renewable energy mandates, create a favorable environment for renewable energy investments. Investors should stay informed about policy developments and consider regions with strong regulatory support for renewables.

By staying informed about market trends and carefully selecting investments in oil, gas, and renewable energy sectors, investors can generate substantial income while contributing to a more sustainable energy future.

Markets swoon, Meta surges…

On Thursday, the main U.S. stock market indices swooned as the latest economic reports resurrected recession fears on Wall Street. The averages closed sharply lower as follows:

• DJIA: -1.21%
• S&P 500: -1.37%
• NASDAQ: -2.30%
• Russell 2000: -3.03%

Notably on Thursday, the ISM manufacturing index, a gauge of factory activity in the U.S., came in at 46.8% for the month of July, worse than expected and signaling economic contraction.

Bucking the broader markets, Meta Platforms (NSDQ) META) rose about 5% on Thursday, in the wake of operating results that beat on the top and bottom lines.

Meta management offered a rosy revenue forecast and stated that the company’s massive investments in artificial intelligence (AI) already are paying off.

WATCH THIS VIDEO: Inside “The Income Zone” With Robert Rapier

Editor’s Note: If you’re looking for ways to generate high income from the aforementioned trends, consider my colleague Robert Rapier.

Robert Rapier is the chief investment strategist of Utility Forecaster, Income Forecaster, and Rapier’s Income Accelerator.

Robert is one of the world’s foremost experts on energy and income investing, but his deep knowledge also extends into other profitable segments, such as AI.

Want to learn about Robert’s latest money-making trades? Click here.

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John Persinos is the editorial director of Investing Daily.

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